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Current Market Outlook
Dear Ben,
We are enhancing our services and
adding new studies (indicators) to our charts...
Advance
Decline Line, TRIX, Standard Deviation
Once again, MarketVolume® is one step
ahead of the competition. Right now, our development team put the
finishing touches on our new Indexes charts. MarketVolume® is the only
source of real-time intraday index volume and advance / decline charts
for major US indexes and exchanges. Now, we are raising the bar even
further. From now on you may
monitor Advance Decline Line for U.S. indexes and
Exchanges.
Advance Decline
Line
Advance Decline Line is one of the
well known breadth indicator in technical analysis. Initially
Advance Decline Line (AD Line) has been applied to NYSE (New York
Stock Exchange), yet, we are the first who started to provide this
technical indicators for other indexes and exchanges which allows to
use AD Line to analyze smaller stock market sectors.
As with
all other breadth indicators AD line could be applied to the basked of
stocks only and is based on the Advance/Decline Issues, however we are
the first who started to apply the Advance Decline Line formula to
volume of advances and declines as well as we are first who started to
monitor AD Line on intraday charts.
Below you may see the S&P 500 advance
decline line and advance decline volume line.
Chart 1: S&P 500 index - Advance Decline
Line.
![S&P 500 index - Advance Decline Line.]()
TRIX and TRX 2
Line
TRIX displays the percent
rate-of-change of a triple exponentially smoothed moving average of a
security's closing price in order to eliminate price movements that
are insignificant to the larger trends by reducing price
volatility.
Below you may see S&P 500 60-day (1 bar = 1
hour) chart example of using TRIX indicator in hypothetical trading
system that generates "Buy/Sell Signals" on crossovers of TRIX and
zero line around which TRIX oscillates.
Chart 2: S&P 500 index - TRIX.
![S&P 500 index - TRIX.]()
Another way of using TRIX is to use it
with "Signal Line". On the chart below (see chart #2) you may see
example of TRIX trading system that generates signals on TRIX and
"Signal Line" crossovers.
Chart 3: S&P 500 index - TRIX 2 line (Signal
Line).
![S&P index - TRIX 2 line.]()
If you compare chart #1 to the chart #2,
you may notice that with the same setting the second trading system is
more sensitive and may earlier spot trend reversals. However at the
same time the second trading system would generate more signals and as
a result probability of fake signals is higher. Furthermore depending
on the trading style one trader may prefer using TRIX while other may
select TRIX with "Signal Line".
Standard Deviation
The Standard Deviation is used in
technical analysis and trading systems to measures stock's volatility
statistically by showing the difference of the prices from the average
one. Normally, this indicator is used as a constituent of other
indicators.
One of use of the Standard deviation is to confirm
the down-trend and up-trend. As a rule, during the up-trend the market
is less volatile while during the downtrend and market crashes we may
witness high volatility which is caused by panic selling.
In
trading systems Standard Deviation (as other volatility indicators) is
used to define periods of the volatility and adjust used technical
indicators setting to it. It is well know that in high volatile market
the price trend changes faster and trading system should react on the
signals faster, otherwise it could be too late to open/close a trade.
At the same time in low volatile market a trader may set the trading
system to generate signals with delay to avoid situation of premature
opened/closed trades.
Chart 4: S&P 500 index - Standard
Deviation.
![S&P 500 index - Standard Deviation.]()
More Studies Coming
Stay with us - And always get
the latest in technical market analysis! ![]()
Market Outlook
Market Stage
(4/1/2009)
On Tuesday we mentioned in our outlook that 'the new
formation of bearish
volume accumulation on this chart may push the indexes towards
recent highs.' From an early deficit, the indexes moved higher and
finished positively.
The view presented by our 60-day SBV(20
period) charts show a SBV advance. This is due to the strong single
sided nature of today's trend higher. At the end of the session, the
SBV values turned positive: plus 17% on the NASDAQ 100 and S&P 500
and plus 13% on DJI. One interpretation of the rising SBV on this
chart is to suggest further advances.
However, the view of the
lower term chart, the trend may still align with the longer term
1.5-year SBV(10 period) chart view. This shows declining SBVs on the
S&P 500 and DJI, while the SBV is flat on the NASDAQ 100. As the
longer term view governs the overall trend, the shorter term view can
show an impending change in the trend. This longer term view shows
declining SBV and is not a positive sign, however the absolute values
of these SBVs are still at highly positive and because of that we may
assume that despite the declining SBV this chart is still
positive.
Market Status
(4/1/2009)
Market
Performance:
|
Last |
Change |
Volume |
A/D Ratio |
| S&P 500 |
810.44 |
![]() |
13.20
(1.66%) | |
5,015,949 |
3.85 |
| NASDAQ 100 |
1,252.51 |
![]() |
15.50
(1.25%) | |
988,557 |
3.30 |
| DJI |
7,758.02 |
![]() |
156.83
(2.06%) | |
1,745,214 |
29.00 |
On
the first day of the second quarter, the indexes advanced tentatively
with some sectors more positive than others. Overall, the NASDAQ 100
was ahead by 1.25%, which pales in comparison to the S&P 500 which
advanced 1.66% and the Dow which gained 2.06%. Cumulatively for the
week, the NASDAQ was ahead by 0.08%, The S&P was negative by a
slight 0.67% and the Dow was also negative although it was by a small
0.23%.
This session's volume numbers was not unusual, the S&P
500 attained a daily volume of 5,016 million shares. This is close to
the average volume we saw on a daily basis during the past 3
months.
NASDAQ 100 -
4/1/2009. 1-day Intraday, Modulated Volume.
![]()
Volume Analysis:
9:30 - 12:00
From yesterday's close, the NASDAQ 100 opened with a strong gap
down. Given the strong formation of Bearish volume at the end of
yesterday's session, the decline was somewhat surprising. This volume
should have supported the index and caused it to move somewhat higher
or at the very least remain unchanged. As the trading progressed
however, the move higher to close the gap continued to develop. The
slope of the uptrend was very steep and we can see some moderate
surges of Bullish volume develop over a broad area. At roughly 10:30
and then 11:30 we can see these surges of volume produced very
clearly.
Within an hour of the open, the index closed the
opening gap and it continued trending higher into the
midday.
12:00 - 16:00 With two large and clearly intense
surges of Bullish volume generated, the probability for a decline was
strengthening. From 12:00 until 12:30 the NASDAQ 100 gave back some of
its hard gained ground. At 12:30 we can see a clear up tick in Bullish
volume. These surges quickly stopped any further declines and already
strong, the trend higher continued.
Higher highs were to be the
result in the afternoon. But despite trending higher over 3% intraday,
any further advances could not be built upon and into the close, the
index dropped strongly only to limp into the close with a slightly
positive finish.
Short
Term (lasts a few hours to a few days):
Since March 23 (8 trading sessions) the index
has basically trended within a small chop zone. And during time we
have continued to write that 'conditions in the market remains mixed'.
The mixed nature does have a bias and currently it is slightly down.
In today's action however, a strong morning decline was followed by a
strong intraday trend higher.
The volume generated in today's
session was in form of Bearish volume during small declines in the
afternoon. From a longer term view, there continues to be a slightly
greater amount of Bullish volume produced which will still have the
effect of causing the index to decline at some near term. Having said
that, conditions remain mixed and therefore a neutral to slightly
positive day would not be out of the question.
Analyst's Daily
Tip:
Charts: Using different views and
settings
To put the magnitude of a volume surge into
perspective, it is essential to look at more than one chart and use
multiple time frames. For instance, while a volume surge may look
imposing and seem critical on 1-day or 5-day chart, that same surge
may not loom as large on a 30-day chart, and it might even seem
insignificant on a 60-day chart. Volume surges that are noteworthy on
short-term charts must always be placed in the context of the higher
time periods, so that misinterpretations of their potential impacts on
mid- or long-term trends can be avoided. For instance, a prominent
surge appearing on a 5-minute chart could well affect an index in the
short term, but it may not necessarily have much of an impact on the
prevailing mid-term or long-term trend.
Volume
surges
Volume surges are evaluated according to their magnitude
and duration. It is vital to appraise each particular volume surge
before attempting to predict how it might impact future market
direction. We categorize volume surges as short-, mid-, or long-term.
We also classify intraday surges.
Short-Term Volume Surges:
These are volume surges that potentially affect market trends over the
short-term (i.e., anywhere from one to several days).
Mid-Term
Volume Surges: These are volume surges that potentially affect the
market over the mid-term (i.e., from several weeks to several months).
Long-Term Volume Surges: These are volume surges that have the
potential to affect market direction over the long-term (i.e., for up
to several years).
Financial Press
Overview:
According to Autodata Inc. car
companies sold 857,735 light vehicles last month. This equates to a 37
percent decline from a year earlier. The silver lining is the fact
that the American companies along with Toyota were positive by
double-digits over February's numbers (the lowest in 27 years). The
average incentive on vehicles sold was $3,169 up 30 percent from a
year earlier. The drive to offer more incentives has been pushed most
readily by Hyundai and GM both of whom have offered more on incentives
than ever before.
Much of the talk between economists is on the
topic of how close the economy is to the bottom. The Commerce
Department has reported Wednesday that construction spending dropped
0.9 percent in February. This marks the fifth straight monthly decline
however it was less severe than the expected 1.5 percent decline. The
slow down in the decline is also echoed by the Institute for Supply
Management which reported manufacturing rose to 36.3 from 35.8 in
February. The low number still implies that the manufacturing sector
is shrinking although not at the torrent pace it once was.
Key economic data for the week
starting Mar 30th, 2009. Numbers shown are consensus estimates (market
anticipates this value) and prior value.
| Thursday: |
![]() |
08:30 Initial
Claims 03/28 653K NA
10:00 Factory Orders Feb -0.3% -1.9% |
| Friday: |
![]() |
08:30 Average
Workweek Mar 33.3 33.3
08:30 Hourly Earnings Mar 0.2%
0.2%
08:30 Nonfarm Payrolls Mar -656K -651K
08:30
Unemployment Rate Mar 8.5% 8.1%
10:00 ISM Services Mar
42.0 41.6 |
![]()
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Sincerely,
www.marketvolume.com
Highlight
Investments Group.
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